Weekly equity market activities strong

DAR ES SALAAM: Market activities on the Dar es Salaam Stock Exchange (DSE) increased in relation to turnover albeit total and domestic capitalisation slightly regressed for equities.

According to the Zan Securities Weekly Wrap Up report, foreign investors continue to remain bearish, resulting in a net outflow of 123m/- within the week.

This shift in sentiment was primarily driven by concerns related to foreign exchange issues.

Looking ahead, the recent release of 3rd quarter reports will solidify year-end estimates further propelling stock prices upwards and are expected to maintain their favourable valuations in the coming weeks.

In the debt market, the central bank is expected to hold a 2-year Treasury bond auction tomorrow.

“We anticipate low subscription levels for the 2 years and yields are expected to edge higher to 10.4 per cent levels,” said Raphael Masumbuko, the Zan Securities Chief Executive Officer.

This movement in yields will be influenced by tight liquidity conditions, which investors will demand higher yields.

The overall uptick in yields can be attributed to several factors, including high budget financing needs, the presence of inflationary risks in the economic environment, and investor expectations.

Yields currently offered on government papers have been on the rise in the recent past driven by tight liquidity and slight depreciation of the shilling leading to investors seeking higher returns to safeguard their real return.

In the secondary market, the focus remains on the longer end of the yield curve.

“Specifically, we anticipate more trading activities centred on off-the-run 20-year treasury bonds. This is expected to push yields to approximately 14.2 per cent,” he said.

In the weeks ahead, activity in the secondary market will be driven by investors who missed out on the primary market auction and hence we anticipate significant trading activities for the 20-year Treasury bond.

The Head of Research and Analytics from Alpha Capital Mr Imani Muhingo said the equity market turnover saw a 55.8 per cent growth compared to the week before.

Equity turnover during the week amounted to 3.53bn/- compared to 2.26bn/- realised in the week before.

The market turnover growth was highly attributed to a six times growth of activities on the NMB counter.

NMB saw a turnover of 2.73bn/- during the week under review, making the counter the week’s top mover, accounting for 77 per cent of the total equity turnover.

The activity growth on the NMB counter results from a prearranged block transaction of 485,497 shares traded for 4,660/-. Comparably, turnover on the NMB counter was 390.1m/- during the week before.

CRDB, which was the top mover in the week before, saw a turnover of 358.1m/- during the week under review, down from 1.59bn/- the previous week.

TBL was the third highest mover with a turnover of 278.2m/-following a prearranged block transaction of 50,000 shares for 5,500/-.

Collectively, the three top movers accounted for 95 per cent of the total equity turnover for the week.

Even on the selling side, foreign participation was minimal during the week, while local investors highly dominated market activities.

Foreign equity purchases were only 0.74 per cent of the total equity purchases while foreign equity sales were 4.23 per cent of the total equity sales for the week.

As a result, the net foreign outflow was down from 611.26m/- the week before to 123.03m/- during the week under review.

The Tanzania Share Index (TSI) lost 12.35 points during the week, equivalent to 0.28 per cent of the domestic capitalization.

The loss of the TSI is highly attributed to the price decline of NMB which accounts for a bit more than 20 per cent of the total domestic market capitalization.

The price of NMB slightly fell by 1.27 per cent and considering the weight of the bank on the domestic market, dragged the whole TSI slightly down.

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